DTN Oil Update
Brent Crude Nears $110 as Hormuz Shut Amid 2-Month Iran War
SECAUCUS, NJ (DTN) -- Global crude benchmark Brent inched towards $110 bbl on Monday as the Middle East crisis entered its second month, with the United States and Iran remaining at odds over a solution that would reopen the Strait of Hormuz to a fifth of world petroleum supply.
President Donald Trump canceled plans over the weekend for U.S. negotiators Steve Witkoff and Jared Kushner to meet with their Iranian counterparts in Pakistan to try and find an end to the war after an indefinite ceasefire he announced last week.
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On Sunday, Iran offered to reopen the Strait of Hormuz, provided the U.S. lifts its blockade on Iranian ports and delays nuclear negotiations.
U.S. Secretary of State Marco Rubio on Monday dismissed the Iranian offer, which he presumed would be conditional upon Tehran's vetting of which ships got to go on the strait, and at what price, given the Iranians' well-reported plans to impose a toll on traffic through the Hormuz.
"They cannot normalize -- nor can we tolerate them trying to normalize -- a system in which the Iranians decide who gets to use an international waterway and how much you have to pay them to use it," Rubio said.
Prior to the outbreak of the Iran war on Feb. 27, the Strait of Hormuz used to be a transit point for as many as 140 ships a day, carrying about 20 million bpd of petroleum liquids. Now, Iran lets a handful of ships go through the strait at any time, squeezing global energy supplies. Compounding matters is the U.S. block of any ship entering or exiting Iranian ports.
It remains unclear if President Trump will entertain the Iranian offer, as he previously vowed not to lift the blockade until a deal is "100% complete." White House Press Secretary Karoline Leavitt said Trump discussed the Iranian proposal with his team on Monday and that the public would hear from the president soon.
The International Maritime Organization (IMO) warned that disruptions on the Strait of Hormuz would likely persist long after the conflict ends. The IMO expects vessels to remain stationary in Middle East waters until there is tangible de-escalation, noting that 20,000 seafarers and 2,000 ships were currently stranded due to the closure.
The NYMEX WTI crude futures contract for June delivery settled up $1.97, or 2.1%, at $96.37 bbl after a session at $ 97.67 bbl.
ICE Brent crude for June rose by $2.90, or 2.8%, to $108.23 bbl, with an intraday high of $109.79.